News Corp (NWSA) Earnings Preview: Will Book Publishing Division Offset Weakness In News Segment?

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Will News Corp (NASDAQ:NWSA)’s Book Publishing division be able to offset the likely weakness witnessed in the news and information services in the second quarter? The advertising scenario for news and information services remained tough and faced a lot of pricing pressures during the holiday season. However, analysts’ expect the company to escape with flat revenue but suffer a drop in earnings. The company reports its financial results on Thursday after the bell.

Revenue Generation

Though News Corp (NASDAQ:NWSA) has different segments, it was the news and information services that generated 67.4% of its total revenue in the first quarter. Advertising forms a big part of the segment, and the advertising trends depend mostly on economic conditions. However, there was not much negative news from the economic conditions. Given the results of New York Times Co (NYSE:NYT), there was a sense of hope that the company would have been able to manage the quarter well.

The company also seemed to have faced pressure in striking a deal for sports programming rights. The media company reportedly failed to renew under favorable terms sports programming rights. However, News Corp is expected to offset the weakness by generating revenues from copy circulation, subscriptions, direct sales and advertising, licensing and affiliate fees and sponsorships.

Digital Segment

News Corp (NASDAQ:NWSA)’s integrated tactics to gain from the transition to digital content from the print should help in one or the other way. Revenue contribution from digital real estate services and digital education represented 7.2%. However, this provided with growth opportunities.

The Book publishing division generated revenue of $406 million in the September quarter representing 24% YOY growth. The division’s contribution to the overall revenue was 18.9% and compensated for weaknesses witnessed in news services.

Expectations

On average, Wall Street analysts estimated the company to earn 24 cents a share and revenue of $2.24 billion for the December quarter. In the preceding year, News Corp (NASDAQ:NWSA) earned 31 cents a share and $2.24 billion revenue. The company’s earnings never missed the Street expectations in the last four quarters.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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